Protect Your Investment!

When you own a property, your hope is that it will increase in value over the years.  This is true whether you live in it or use it as a rental.  It’s easier to maintain your own residence because you’re there every day and tend to notice the items that need attention, like a leaky sink or roof, a cracked window, peeling paint, etc.

But when that home is a rental, you have to make a concerted effort to get inside and take a look … for maintenance issues, and tenant cleanliness issues as well.

For my Indianapolis rental properties, I try to do apartment checks after we’ve had a good soaking rain.  Here are some things I always check:

  • Smoke alarms
  • Furnace filters (they should be changed every three months)
  • Ceilings (for leaks)
  • Under every sink (again, for leaks)
  • Floors around toilets and tubs (are they soft? If so, there’s a water leak somewhere)
  • All rooms for cleanliness

I do the same for all of the rentals I manage for other people.  It’s important that your tenants see your face from time to time.  When they know you care, they’re more likely to care!  And of course, there’s a clause in my lease allowing me to evict if they don’t maintain the property.

At some point down the road, whether it’s your own home or a rental, you’ll want to sell.  If you protect that investment now, your efforts will be rewarded in the end, when you plan your exit strategy.

Happy investing!   🙂

Hot and Cold …

An interesting issue arose at one of my duplexes last week.  Brian, my tenant on the north side, called and said he had no heat.  It was freezing in his side of the house.  I texted Courtney, who lives on the other side, and asked if the heat was working.  She was at work, but texted back, “Yes.”

The heat isn’t metered separately there and the thermostat is on Courtney’s side.  There’s no dial, just an On/Off switch.  When the temperature dips below 72 (very kind of me, I must say!) the furnace kicks on automatically.

So I was perplexed about this issue and had my handyman Craig stop by to check and see what was going on.  First, he went into Brian’s half of the house and yes, it was cold in there.  So he let himself into Courtney’s side and it was toasty warm in there.  One short look around told him why:

1) She had a space heater running in the living room.

2) She had ALL FOUR burners of her stove turned on high, in the kitchen.

The thermostat was in the dining room, which was in between the living room and kitchen, so with all that heat radiating from those extra sources, it was HOT in there!  Of course, the furnace wasn’t kicking on at all.  Courtney’s side of the house was very warm and Brian was freezing.  Horrible!

I had Craig turn off the stove and space heater — talk about fire hazards! — and immediately texted Courtney and had her call me.  Needless to say, I had a corrective interview with her.  I’d told my tenants not to use their stoves as heat sources.  And yes, space heaters today are greatly improved, but should never be used when no one is home.  I told her as much, and said she could only use it upstairs in the bedrooms, so that it wouldn’t screw up the thermostat.

Hopefully, she understood, and none of this will happen again.  I may have to pop in and check on that … she could’ve burned the house down!  Sheesh!

Onward and upward …

Illegal Entry?

I own and manage 27 rental property units in Indianapolis, and also manage homes for other owners.  I love my work and have gotten fairly adept at it over the years.  When I consult with people who are considering getting into the business, their greatest concern it that tenants will totally trash the rental unit.

Well, yes, that can happen, but there’s an easy fix for that.  Do occasional walk-throughs, and make that privilege part of your lease agreement.  My lease states, “Tenant will allow landlord to show, make repairs or inspect apartment when necessary.”  I explain that the home is in excellent condition and I hope they’ll maintain it.  I’ll be coming in — with proper notice, of course — every once in a while, to do a walk-through.

The key word here is “proper notice.”  Tenants have rights to the property.  Don’t ever think that, just because you own the rental, you can go over there unannounced and gain entry, even to the back yard or garage.  Your tenant (if so inclined) could order you off the property and be correct in doing so!  If you refused, he/she could call the police and have you arrested and hauled off.

By all means, do put a clause in your lease that allows you access to your property.  It’s your asset and you must protect it.  But make sure you give your tenant notice, usually 24 hours, before you come.  It’s common courtesy, but it’s also the law!

Better to Buy Right Now?

Mortgage rates are near a 50-year low and foreclosures continue to flood the housing market.  It was also recently disclosed that the banks are withholding thousands of these foreclosed homes, and will release them into the market throughout 2012.  This is only going to delay the housing recovery even more.  But I guess the good news in this: for investors (or other buyers who can qualify) there’s plenty of inventory out there, prices are going to bump along the bottom for a long time, and it’s a great time to buy, as mentioned in the following article that appeared in Kiplinger on line:  

Indianapolis is actually cited as one of 10 cities where the prices are low/stable and unlikely to drop much further.  They also talk about a price/rent ratio, often called the rent-to-buy ratio.  To find out whether it’s smarter to buy or rent in your area, you take the value of the home you’re looking to buy, and divide it by the annual cost of renting the same type of dwelling. If the number is below 15, it’s a good buy.  Above 15, smarter to rent.

For example, on the foreclosure I bought last fall, I paid 35K and have a total of 40K in it.  At 825/month rent, my ratio is 4! Definitely a buy.  And even at the true market value of the home, compared to those around it (80K), the ratio is only 8.

The rent-to-buy ratio here is excellent, and we have a very strong rental market.  I was able to find a fantastic renter for that home as soon as it was finished and ready to go.  So we’re fortunate here.  It’s a great market for buyers — if you can qualify.  And there’s the catch.  The banks have tightened their purse strings and are making it difficult.

They’ve gone from way too lenient to way too strict.  Hopefully, the pendulum will swing back to middle ground soon . . . in the mean time, people everywhere are being forced into rentals.  For us landlords, life is good . . .      🙂